Should You Accept a Backup Offer on Your South Bay Home?

by Ben Larson

(The information below is for reference only based on research and personal experience, it is NOT meant to be legal, financial, or tax advice. I can refer you to any of those professionals so feel free to reach out.)

Should you accept a backup offer on your South Bay home?

In most cases, yes, as long as the backup buyer is solid and the paperwork is done right. A backup offer is a signed contract that only kicks in if your first escrow is properly cancelled, so it can save you from relisting if your buyer walks. It does not let you trade up to a higher price while you are still in contract, and it gives the backup buyer more freedom to leave than it gives you.

By Ben Larson | October 25, 2026

One of the most common questions I hear from sellers right after they accept an offer is some version of a Reddit thread title I saw this year: "What does 'accepting backups' actually mean when a house is under contract?" It usually comes up because a second buyer still wants the house.

This fall, it is a fair question. Redfin reported that about 14.5% of home purchase agreements nationwide were cancelled in September, a record for that month outside the early pandemic. Closer to home, one local agent's daily CRMLS recap for October 25 showed eight homes back on the market, and two of them were escrows that genuinely fell apart, one in Palos Verdes Estates and one in Rancho Palos Verdes. Escrows do fail here, and when they do, a backup buyer already under contract can be worth a lot.

Here is how backup offers actually work in California, when I recommend taking one, and when I tell my sellers to pass.

How a backup offer works in California

In most South Bay sales, the backup buyer signs a regular purchase agreement plus the C.A.R. Back-Up Offer Addendum (Form BUO). That addendum does a few important things:

It sets a position. The buyer is in backup position number one, two, and so on.
It only activates on a real cancellation. The backup contract is contingent on written cancellations of the earlier contract signed by all parties, plus a mutual release. A phone call saying "the first buyer is out" is not enough.
It usually delays the deposit and the deadlines. By default, the backup buyer's deposit is due three business days after you deliver those signed cancellations, and their contingency periods start the day after. The parties can check boxes to start them sooner.
It has a cancellation date. If you cannot deliver the signed cancellations by that date, either side can walk away from the backup in writing.
The backup buyer can leave at any time before activation. Until you hand them the signed cancellations, they can cancel in writing for any reason.

One trap: a specific calendar closing date in the backup contract does not move when the buyer moves up later. I prefer a closing date written as a number of days after the buyer moves into first position.

On the MLS, your listing would show as Active Under Contract instead of Pending. In CRMLS, that status tells other agents you are in contract but still open to backups, and your days on market keep counting.

What a backup offer can and cannot do for you

A backup offer is a safety net, not an escape hatch.

What it can do:

Save you from starting over. If your first buyer cancels during their inspection or loan contingency, you can move straight to a buyer who has already agreed to a price and terms. You skip relisting and the "why did it fall out?" questions.
Keep your first buyer honest. When a buyer knows someone is waiting, a last-minute repair request or price cut is harder to justify. One agent on Reddit described backups as a tool that weakens the first buyer's negotiating power, and in my experience that is the main value.
Give you leverage on deadlines. If your buyer asks for more time, the backup changes your answer. I covered how to handle that in my post on what to do when your buyer wants to extend escrow.

What it cannot do:

Let you take a better price. If your first buyer is performing on time, you cannot cancel because the backup pays more. California attorneys warn that a seller who cancels without a contractual reason can face a breach claim, a demand to close the sale, and a lis pendens that clouds title while it is sorted out. If you want the right to keep marketing for a stronger buyer, that has to be built in up front, which is what a kick-out clause on a contingent offer is for.
Force your first buyer out. Even if your buyer misses a deadline, you generally have to give a Notice to Buyer to Perform and wait the notice period before you can cancel. If the first buyer will not sign the cancellation, the backup cannot activate under the standard form, and the deposit fight goes to escrow. That is a question for a real estate attorney, not a phone call between agents.
Lock in the backup buyer. They can walk before activation. If they find another home while they wait, your safety net is gone.

When I recommend accepting a backup offer

I usually tell sellers to accept a backup when the following are true:

Your first deal still has open contingencies. Most fallouts happen during inspection, appraisal, and loan review. My South Bay seller escrow timeline shows where those windows usually fall.
The backup offer is one you would happily accept on its own. Same or close to your price, a clear deposit, and terms you could live with if it became your only deal.
The backup buyer is well prepared. Ask for the same proof of funds or lender letter you required from the first buyer.
The cancellation date matches your timeline. Long enough to cover your first buyer's contingency period.

This comes up most often after multiple offers. If you had three offers on your home in Redondo Beach or Torrance, the runner-up is the natural backup. My guide on handling multiple offers covers how I rank them in the first place.

When I tell sellers to pass

Your first buyer has already removed contingencies. At that point, the deal is far less likely to fail, and the backup is mostly paperwork.
The backup offer is weak. A low price, a long list of contingencies, or a buyer who has to sell first can leave you worse off than relisting.
You want to keep your options open. If the market around you is moving and you think you could do better after a fallout, a signed backup locks in terms that might look low in a few weeks.
The paperwork is sloppy. A text or email saying "we'll be your backup" is not a backup offer. If it is not on the BUO with a signed purchase agreement, treat it as interest, not a contract.

How often do backup offers actually close?

Less often than sellers hope. One agent on Reddit said a backup had moved into first position for them maybe two or three times in ten years. Other agents put it closer to one in five in markets where more deals are cancelling. With South Bay inventory up this fall (one mid October report counted 1,124 active listings, 728 of them on the market 30 days or more), I expect more fallouts than last year.

So treat a backup as cheap insurance. It costs you almost nothing to sign if the terms are right, and on the rare occasion your first buyer walks, it can save you weeks. If your buyer does cancel after inspections, my post on whether a buyer can back out and keep the deposit explains what happens to the money.

Frequently asked questions

Can I accept a higher backup offer and cancel my first buyer?

Not just because it is higher. If your first buyer is meeting their deadlines, cancelling to take a better offer can expose you to a breach of contract claim. Talk with a real estate attorney before you try to cancel any signed contract.

Does a backup buyer put down a deposit right away?

Usually not. Under the standard C.A.R. backup addendum, the deposit is due three business days after you deliver the signed cancellations of the first contract, unless the parties check the box to make it due sooner.

Can the backup buyer back out while they wait?

Yes. Until you deliver the signed cancellations from the first deal, the backup buyer can cancel in writing for any reason. After they move into first position, their regular contingencies apply.

Is a backup offer the same as a kick-out clause?

No. A kick-out clause lets you keep marketing while your buyer tries to sell their own home, and gives that buyer a set time to remove the contingency or step aside. A backup offer simply waits in line in case the first deal cancels.

The bottom line

A good backup offer is one of the easiest ways to protect your sale, especially this fall, when more escrows are cancelling than usual. Take it when your first buyer still has contingencies open and the backup is a deal you would sign on its own. Do it on the right form, set a sensible cancellation date, and never treat it as a way to trade up mid-escrow. If you are getting ready to list on the Peninsula or in the beach cities and want to plan for offers like these, start with a free home value estimate and we can talk through your strategy.

Wondering what your buyers will compare your home against?

When I prepare sellers for offers, I have them look at the same searches their buyers are scrolling. These are good places to start:

About Ben Larson

Ben Larson leads Larson Realty Group, powered by Real Broker, serving the South Bay of Los Angeles. Licensed since 2006 with more than $100 million in closed sales, he specializes in listings across the Palos Verdes Peninsula and the beach cities, and works extensively with probate, trust, and inherited property sales. Reach him at https://larsonrealty.group. DRE #01746853.